After recently going public, Mach Natural Resources is growing its position in the Anadarko Basin with an $815 million acquisition.
Oklahoma City-based Mach Natural Resources LP is acquiring oil and gas properties, rights and assets in Oklahoma from Paloma Partners IV LLC, an upstream company backed by private equity firm EnCap Investments.
Total cash consideration for the transaction is $815 million, subject to closing price adjustments. The deal is expected to close Dec. 29, with an effective date of Sept. 1.
Mach’s latest acquisition comes just over two weeks after the Midcontinent E&P listed its shares on the New York Stock Exchange.
The acquisition from Paloma will add approximately 62,000 net acres spanning across Canadian, Grady, McClain, Caddo, Custer, Dewey, Blaine and Kingfisher counties, Oklahoma, Mach announced Nov. 13. More than 75% of the newly acquired acreage falls within Mach’s core development area in Canadian and Grady counties.
The acquired assets include recent production of about 32,000 boe/d (23% oil, 57% liquids), as well as proved reserves of approximately 75 MMboe.
RELATED
MLP Mach Resources’ IPO Gets Off to Solid Start
There is currently one rig running on Paloma’s acreage in Grady County; six wells are expected to be completed between the effective and closing dates, Mach said.
Mach plans to fund the acquisition with new debt financing. The company has secured $825 million in senior secured financing from a group led by Chambers Energy Management and EOC Partners; Mercuria Investments US Inc., Macquarie Group and funds managed by Farallon Capital Management LLC are also participating in financing the loan.
Mach expects that its debt-to-EBITDA ratio will remain below 1.0x after closing the deal.
Mach is led by Tom Ward, an oil and gas industry veteran who previously co-founded Chesapeake Energy Corp., SandRidge Energy and Tapstone Energy.
Chesapeake and SandRidge are both publicly traded E&Ps; Tapstone was acquired by Diversified Energy for $419 million in 2021.
The newly public MLP Mach, similar to other MLPs, is set up to distribute all available cash to unitholders each quarter after costs and expenses. The company said the Paloma acquisition will be accretive to both total cash available for distribution and expected cash distribution per unit.
Kirkland & Ellis is serving as legal advisor for Mach. Vinson & Elkins is serving as legal adviser and RBC Richardson Barr is serving as financial adviser for the sellers. Latham & Watkins serves as legal adviser for the term loan participants.
RELATED
Former Chesapeake, SandRidge Exec Plans IPO for Anadarko E&P
Recommended Reading
Watson: Implications of LNG Pause
2024-03-07 - Critical questions remain for LNG on the heels of the Biden administration's pause on LNG export permits to non-Free Trade Agreement countries.
CERAWeek: Energy Secretary Defends LNG Pause Amid Industry Outcry
2024-03-18 - U.S. Energy Secretary Jennifer Granholm said she expects the review of LNG exports to be in the “rearview mirror” by next year.
Belcher: Our Leaders Should Embrace, Not Vilify, Certified Natural Gas
2024-03-18 - Recognition gained through gas certification verified by third-party auditors has led natural gas producers and midstream companies to voluntarily comply and often exceed compliance with regulatory requirements, including the EPA methane rule.
Hirs: LNG Plan is a Global Fail
2024-03-13 - Only by expanding U.S. LNG output can we provide the certainty that customers require to build new gas power plants, says Ed Hirs.
Despite LNG Permitting Risks, Cheniere Expansions Continue
2024-02-28 - U.S.-based Cheniere Energy expects the U.S. market, which exported 86 million tonnes per annum (mtpa) of LNG in 2023, will be the first to surpass the 200 mtpa mark—even taking into account a recent pause on approvals related to new U.S. LNG projects.